Jane Chen / Shanghai Daily news

China's auto insurance policies make great changes, as its biggest auto insurance firm in terms of market share will apply a new edition of policy from this month.
PICC Property and Casualty Co Ltd, which claims 60 percent of China's auto insurance market, announced last Friday that it will replace its existing auto insurance policy with a more flexible one after a two years' market research.
The new policy is an overall reform of the existing edition, which was launched from the start of 2003, said Jia Haimao, vice executive president of PICC P&C
The new policy's compensation standards vary according to the driving safety records of those insured, rather than be uniform for every client as they are now.
While the fueling price wars of auto vehicles have dragging down the premium revenues of the auto insurance products, the rapidly growing number of newly licensed drivers has accumulated the risks for the auto insurance firms, Jia said.  These have led to profit erosion for the insurers, he added.
According to Jia, in the first nine months, PICC has handled 44.9 million compensation cases, with 1.6 million cases yet to be processed.  The total cases are nearly up 30 percent over the same period of last year.
Private car owners, who have been granted the lowest compensation thresholds, have reported the highest compensation cases, far beyond the company's expectations, Jia said.
"In the past year, almost every private car owners have reported compensation cases. The most risky driver has reported 29 compensation cases," he added.
In this case, a more flexible and fairer insurance policy must be introduced to ward off the insurers' risks, Jia said.
In PICC P&C's new policy, for example, customers who haven't reported compensation cases for one year can get a 10-percent discount in premium charge.  The discount will increase, if the clean record remains, and will end up at the ceiling of 50 percent.
On the contrary, those with poor safety records may have their premiums up.
With this flexible insurance policy, PICC hopes to improve the use of its resources, said Shao Liduo, vice general manager with PICC's auto insurance department.
"Under the 2003-edition of policy, auto insurance companies have to put most of their resources to serve the high-risk customers, while those of better driving credit and lower risks don't have service they're deserved," he noted.
Another important change in the new policy is that the insurance company will no longer cover for the insurance under 500 yuan (US$60), which the customers will shoulder.
But they may have the insurance company to cover it, if they buy affiliated insurance products.
Veteran female drivers may enjoy lower premium charges, as they are considered safer in driving.